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Tripura to crackdown on chit fund companies

By Correspondent

AGARTALA, May 8 � Armed with The Tripura Protection of Interest of Depositors (Amendment) 2011 Act, the Small Savings and Institutional Finance department is all set to crackdown on Non-Banking Financial Companies (NBFCs), popularly known as chit fund companies across the State.

The Amendment Bill, which was passed in the State Assembly during the last Budget session, received Governor DY Patil�s nod on April 29 paving the way for enactment of the stringent Act.

The Bill is now with the Law department which is expected to give its assent within the next few days, according to official sources. �We are contemplating to prepare rules based on the Bill within May to enable the authority to go all out against the chit fund companies, said LN Rokhum, Director of Small Savings and Institutional Finance here on Monday.

He said that all necessary steps have been incorporated in the Bill to protect the interests of the depositors. �Under the Act, each NBFC or chit fund company need to inform the respective district or subdivisional administration about their business in details. Besides, they will have to place their financial statements to the competent authority at the end of every three months�, he said.

�If they fail to follow the prescribed guidelines, the department can impose a fine of Rs 25,000 on them for each default�, he said adding that if charges are found genuine against any chit fund or NBFC, the owner or proprietor may face imprisonment of up to 12 years.

The Bill clearly says � no such company or organisation is allowed to collect public money without prior permission from the Reserve Bank of India (RBI). As per the RBI guidelines, no financial institution is allowed to provide beyond eight per cent interest to its depositors. But, the NBFCs or chit fund companies are often collecting deposits by promising 20-40 per cent interest on their deposits.

As many as 118 NBFCs are operating in the State but the department has been unable to trace the office of 14 such companies.

Rokhum admitted that there was a spurt in the activities of the NBFCs or chit fund companies due to absence of proper Act or rules. However, things would change a lot within the next few weeks, he promised.

In the year 2008-09, the Small Savings department collection suffered a serious set back netting only Rs 54 lakh while the target was Rs 75 crore. However, the collection has gone up to Rs 140 crore in 2009-10 and this year 2011-12 it may go beyond Rs 200 crore.

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Tripura to crackdown on chit fund companies

AGARTALA, May 8 � Armed with The Tripura Protection of Interest of Depositors (Amendment) 2011 Act, the Small Savings and Institutional Finance department is all set to crackdown on Non-Banking Financial Companies (NBFCs), popularly known as chit fund companies across the State.

The Amendment Bill, which was passed in the State Assembly during the last Budget session, received Governor DY Patil�s nod on April 29 paving the way for enactment of the stringent Act.

The Bill is now with the Law department which is expected to give its assent within the next few days, according to official sources. �We are contemplating to prepare rules based on the Bill within May to enable the authority to go all out against the chit fund companies, said LN Rokhum, Director of Small Savings and Institutional Finance here on Monday.

He said that all necessary steps have been incorporated in the Bill to protect the interests of the depositors. �Under the Act, each NBFC or chit fund company need to inform the respective district or subdivisional administration about their business in details. Besides, they will have to place their financial statements to the competent authority at the end of every three months�, he said.

�If they fail to follow the prescribed guidelines, the department can impose a fine of Rs 25,000 on them for each default�, he said adding that if charges are found genuine against any chit fund or NBFC, the owner or proprietor may face imprisonment of up to 12 years.

The Bill clearly says � no such company or organisation is allowed to collect public money without prior permission from the Reserve Bank of India (RBI). As per the RBI guidelines, no financial institution is allowed to provide beyond eight per cent interest to its depositors. But, the NBFCs or chit fund companies are often collecting deposits by promising 20-40 per cent interest on their deposits.

As many as 118 NBFCs are operating in the State but the department has been unable to trace the office of 14 such companies.

Rokhum admitted that there was a spurt in the activities of the NBFCs or chit fund companies due to absence of proper Act or rules. However, things would change a lot within the next few weeks, he promised.

In the year 2008-09, the Small Savings department collection suffered a serious set back netting only Rs 54 lakh while the target was Rs 75 crore. However, the collection has gone up to Rs 140 crore in 2009-10 and this year 2011-12 it may go beyond Rs 200 crore.